Bank of America has upgraded its rating on toy company Hasbro Inc (NASDAQ:HAS) to 'Buy' from 'Neutral', setting a price target of $80, citing optimism about the company's digital gaming strategy and recovery in its consumer products segment.
Analysts cited expectations that Hasbro's digital gaming initiatives, particularly with Monopoly Go!, will exceed current market forecasts as the reason behind the upgrade.
They anticipate Monopoly Go! to begin generating substantial operating profits in the second half of 2024, potentially contributing approximately $36 million per quarter.
"We do not believe consensus forecasts are fully accounting for the success of HAS' digital gaming strategy with Monopoly Go!," Bank of America analysts wrote in a note to clients.
Hasbro's consumer products division is also showing signs of recovery, according to the analysts. They noted positive sell-through data in April and highlighted a resurgence in toy sales at retailers like Costco, indicating improving market conditions.
Furthermore, Bank of America expects stability in Hasbro's Magic business, despite challenges such as core player fatigue and competitive dynamics in the trading card game market. The analysts pointed to upcoming game releases and steady consumer interest as key factors supporting the segment.
Looking ahead, Bank of America sees Hasbro poised for momentum into 2025, driven by sustained growth in digital gaming, recovery in consumer products, and a favorable industry backdrop. They anticipate continued benefits from Monopoly Go! royalties and potential growth from new product launches.
"We think HAS is poised for stronger 2025 momentum," Bank of America analysts stated, highlighting anticipated contributions from Monopoly Go! beyond minimum royalty guarantees and a return to modest growth in consumer product sales.
Investors responded positively to the news, with Hasbro shares rising 5.5% in early Friday trading following the upgrade.